O'Brien: Google's grip on users is as firm as it is invisible

As antitrust scrutiny mounts against Google (GOOG), the company offers a simple refrain to deflect a destructive legal showdown with federal regulators:

As Google Chairman Eric Schmidt put it during his appearance before a Senate subcommittee last month: "The competition is only one click away."

The notion is as seductively simple as it is untrue. It resonates because it plays to the fantasy that the Internet is a free market paradise. In reality, Google has amassed a number of advantages that, while they may not be visible, make it improbable that millions of users will suddenly jump ship just because someone builds a better mousetrap.

"People can quit smoking any time, too, but they find it very hard to do it," said Danny Sullivan, editor of the Search Engine Land blog and a longtime Google observer. "If you've got that habit, it's very hard to break it. People don't just go over and start trying new things."

Now, to be fair to Google, it's understandable why the company embraces this narrative. When the company was created in the late 1990s, Larry Page and Sergey Brin built a product that won primarily because it was better than the competitors. They were the competition that was "one click away" and the world did indeed click over.

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Still, the world of search has changed in the past decade, as has Google's leverage. Sullivan pointed out the first obstacle: Our deeply ingrained habits. Google, which has 68.3 percent search market share in the U.S. according to Compete, has become a verb synonymous with search. We think that tie is weak because we don't have to pay money to use Google, or even create an account. But inertia is a powerful force.

But let's say I do build a better search engine and persuade you to give it a whirl. The next problem is that I really only have a shot at some percentage of Google users. That's because a portion of Google's traffic comes via deals it strikes with other companies like AOL, MySpace and Mozilla's Firefox browser, to use its search engine or give it prominent placement.

The company doesn't disclose how much of its traffic comes through these deals. But Google spends millions of dollars paying these partners for that placement, in some cases losing money on deals with AOL and MySpace just to keep that traffic flowing to Google and not to competitors, according to Silicon Valley attorney Gary Reback, who represents several companies claiming to be victims of Google's tactics.

"Some of the deals they are losing money on," Reback said. "They're doing it to deny competitors scale."

Of course, competitors with deep pockets like Microsoft's Bing might have the resources to try to outbid Google for these deals when they expire. But even Bing, because it has a weaker advertising network, would have to absorb bigger losses than Google. In any case, the notion that two guys in a garage could do the same is, of course, absurd.

If I clear those first two hurdles, I will run smack into another Google advantage: the network effect. As more people do more searches on Google, the search results get better. While Google's search initially relies on its algorithm to rank search results, it also factors in users' behavior to refine those. That becomes especially helpful in improving search results on obscure items, where there are fewer searches.

"The biggest network effect Google has is that they get so many signals across the Web," Sullivan said. "It's very difficult for another competitor to get that information."

The final barrier is physical infrastructure. The company has built massive data centers around the world that allow it to deliver instant results. If you could get the users and the momentum, it's possible that some venture capitalists might pony up the money to build out infrastructure. But it would still take years to actually match Google's current footprint and meanwhile, you can be sure that Google won't be standing still.

Reback said that even if the basic algorithm is better, competitors' search engines would be inferior because they lacked the scale and user feedback Google's has.

"Saying you can always choose something that doesn't work as well, that's not really a choice," Reback said.

None of this means that Google is violating antitrust law. Remember, it's legal to have a monopoly. And at the end of the day, Google's search engine is simply better, thanks in no small part to the advantages it has developed.

The problem is whether a company is abusing that monopoly in ways that hurt consumers or hamper competition. And while some competitors insist that's what Google is doing, antitrust regulators will face a complex task in making a legal case.

But before it comes to that, Google has been trying to cut those arguments short by perpetuating the myth that if it's a monopoly, it's a precarious one. That's nonsense. Whether it's good for us or not, we should have no illusion that Google's grip on users is anything less than firm.

Contact Chris O'Brien at 415-298-0207 or cobrien@mercurynews.com. Follow him at Twitter.com/sjcobrien and read his blog posts at www.siliconbeat.com.